Factors in Hutchinson's declining retail sector

Wednesday

Jan 31, 2018 at 1:01 AM

By Dan Deming

Why are so many businesses moving out of Hutchinson? The answer is complicated, and it would be foolish to conclude that taxes and special assessments alone are responsible for our retail community sliding downhill.

Financial difficulties by some national outlets -- Sears, Kmart, J.C. Penney's just to mention several -- have hit not only our town but also many others resulting in closings. But the list is long, soon including Target, and includes Dillard's, Eaton Hydraulics, Lubbers car dealership, Legacy Foods, Sport Shack, Johnson Music, Hayes Slight and Sound, other downtown and mall stores, somewhat tempered by the mall's new strip development that features T. J. Maxx and Harbour Freight.

Target's departure takes $4,825,210 off assessment rolls and translates into more than $187,000 in annual taxes. Target also paid the city $5,462 in yearly stormwater fees. Kmart's loss lowers assessments by $1,885,000 and a nearly $70,000 annual tax bill. The Hutchinson Mall's decline has gone from an assessment of $22,558,590 10 years ago in 2007 to a 2017 assessment of $5,016,330. Despite a noble effort to save the mall by Texas-based Rockstep Capital, property taxes are now about $136,000 annually compared with $612,000 in 2007.

Another factor that may be influencing some from locating here is Hutchinson's annual stormwater fees. The revenue is used for needed drainage improvements, but the cost to local businesses, schools and government is significant. Hutchinson public schools paid $32,434 last year in city stormwater charges. That means higher USD 308 property taxes that were turned over to the city. Hutchinson Community College also was charged for stormwater based on acreage it owns while Reno County paid $7,356 for its assessment.

Eaton Corp. paid the city $13,560 in stormwater fees for its now-closed plant. Walmart, the city's largest collector of sales tax, pays city hall $14,160 for stormwater; the Siemens Gamesa plant pays $34,009, Hutchinson Correctional Facility generates $43,870 in state-paid fees while the Kansas State Fair pays $51,870, which has caught legislative attention since many cities don't have similar assessments.

Of course, every small business also pays a stormwater fee such as $702 from Cooper Tire Service and $627 from the Rib Crib. Homeowners also pay for stormwater improvements on their monthly water/utility bills.

Unless a still-unresolved environmental cleanup issue scuttles plans, the former Dillons East 30th Northgate property at 30th Avenue and Plum Street will soon be owned by Hutchinson public schools. In the long run, this is likely to prove beneficial; certainly better than a prime location continuing to sit vacant and deteriorate. But it takes $1,590,400 off the property tax rolls and over the next 10 years will drain more than $700,000 from property taxes, shifting from a business payer to homeowners and others forced to pick up the tab for government and school services. Landfill revenue is also reduced when businesses leave or a public agency takes over business property.

As City Manager John Deardoff recently noted in his always informative and well-done state of the city address, all is far from gloom and doom. The city has invested hundreds of thousands of dollars into Main Street revitalization and infrastructure. New developments are taking place: Firehouse Subs and the office/retail splurge in the 1400 block of East 30th. Disability Supports out of McPherson has taken over the long-vacant Hutch Clinic site at 12th Avenue and Main Street resulting in great improvements. There have been expansions around 30th and Main; new senior rental housing at Sherman and Washington is planned. The Bold Offices and related activity along East Fourth Avenue, a new Sonic Drive-In and Love's convenience store in South Hutchinson, along with a new South Hutch Agri Center and plans for a major retail, grocery and housing development at F and Main in that city.

But unless we can make significant progress in adding additional, better-paying jobs and growing our stagnant city and county population, the outlook is less than bright. We desperately need more people to expand our economic base rather than simply move dollars around as one new business replaces another that has failed.

Dan Deming, retired general manager of Hutchinson radio station KWBW, lives in Hutchinson and is a Reno County commissioner. Email: dan.deming@cox.net.

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